• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Present a report which outlines and evaluates the main contributions Friedrich Von Hayek (1889-1992) made to our understanding of macro economics.

Extracts from this document...

Introduction

Macro Economics II Assignment Submitted to: John O Callaghan Submitted by: Ruth Lennon Student No.: 1061022 Present a report which outlines and evaluates the main contributions Friedrich Von Hayek (1889-1992) made to our understanding of macro economics. The Austrian born economist Friedrich Von Hayek presented some of the most influential theories on markets in the 20th century. As a defender of the free market and of classical liberal principles he believed that we must move away from a state-controlled or "planned" economy and towards a society based upon freedom of association and exchange according to the rule of law. He is credited as being the "most prodigious classical liberal scholar of this century" and has been described as the central pioneering figure in changing the course of economic thought in the twentieth century." (Thomas Sowell, 1995). Hayek was born in 1899 in Vienna into a family of intellectuals. After serving in the army of World War I, he studied and received doctorates in law, psychology and economics from the University of Vienna (1921-1923). It was at this time that the theories of the Austrian School of Economics were being formulated and refined by Eugen Boehm, Friedrich Wieser and Ludwig von Mises, all of whom were second generation Austrian Economists. ...read more.

Middle

The book also attempted to develop a joint theory of investment and capital. However correct his assessment may have been, this book, Hayek's most technical, was his least influential. The book inexplicably failed to sell. At this time Keynes's brand on economics was on the rise. It appeared that in the eyes of the public Keynes had defeated Hayek and Hayek lost his standing in the profession. The "Pure Theory of Capital" proved to be Hayek's last substantial effort in the area of theoretical neoclassical economics. During this time Hayek was also involved in another grand debate sparked from Mises' denial that "a socialist economy could price its goods and services in accordance with the principles of relative scarcity." (Blaug, 1988, p88). This debate was known as the socialist calculation debate. Mises wrote, in his famous article "Economic Calculation in the socialist Commonwealth" (1920), that "pricing systems in socialist economies were necessarily deficient because if government owned the means of production, then no prices could be obtained for capital goods as they were merely internal transfers of goods in a socialist system and not objects of exchange, unlike final goods and thus they were unpriced and hence the system would be necessarily inefficient." ...read more.

Conclusion

He can be regarded as the key figure in the 20th century revival of liberalism. He played the lead role in the current tide change away from statism and back to liberalism which is regarded by many as a defining event of the 20th century. Hayek contributed greatly to our present day understanding of macroeconomics. He emphasised the importance of prices. He explained that the price system reflects the imbalance of demand and supply, and it automatically steers resources to where they are most needed without the need for planners to discover, understand, and correct the imbalance. He showed that competition was a dynamic process in which people are constantly searching to discover the cheapest mix of resources to produce the most desired output. Hayek highlighted the advantages of markets over planning. He demonstrated that the planned economy rests on the unlikely assumption that everyone can agree what to produce unlike the market exchange which works because people value things differently. It is around these basic principles that Hayek based his theories which have earned him the renowned respect as one of the most masterful economists of his time. Hayek's reputation has gone through a remarkable cycle as has the popularity of his work. He has provided the present day world with many foundations on which to build our understanding of economics, he truly was the political economist that economics had not seen since Adam Smith. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Accounting section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Accounting essays

  1. Discuss the main theories of international finance and assess how each of them would ...

    Therefore, we can conclude that the PPP theory is valid and able to measure the foreign exchange rate precisely only in the situation that the economic system is in full-employment. Unless using PPP theory in this situation, the change in disposable income will not reflect the change in the prices of goods and services.

  2. Sample Accounting Report Writing

    This allows the business to identify the debtors' paying pattern and track them easily. If the debtor shows slow paying history, the company may need to reconsider their credit policy with the debtor as there is a high tendency for the debt being fault.

  1. Financial statement analysis

    Financial Leverage Quick Ratio WORKING CAPITAL/FUNDING GAP ANALYSIS SUSTAINABLE GROWTH RATE ANALYSIS CASH SUFFICIENCY ANALYSIS Accounts Receivable Turnover Sustainable Growth Rate Dividend Payout Ratio Days Receivable Inventory Turnover Days Inventory Days Payable Funding Gap APPENDIX V: OTHER RATIOS Operating Assets Applying spread analysis, it is possible to derive additional insight

  2. financial report

    One of the concepts I had used was Double Entry, This concept puts the basically has every transaction recorded twice one on the left had side of the account the Credit column and one on the right hand side the debit column. For this concept there are many accounts i.e.

  1. Drakensberg Limited Case Report. The main problems are whether to launch a new product ...

    Outsourcing The company may benefit from outsourcing to foreign shores, since the cost will be much lower than the domestic ones. Furthermore, it would solve the problem of lacking the raw materials and skilled labor in local. However, outsourcing is risky.

  2. Two-page report if an aggressive takeover should occur on BHP Billiton Ltd

    BHP has financial strength through its strong cash flow and balance sheet, a diversity of products and customers, access to global capital markets and an enviable platform of growth opportunities. The group has also maintained its share buyback program and has regularly increased its generous dividend payout.

  1. Two-page report if an aggressive takeover should occur on Fortescue Metals Group Ltd (FMG)

    This could pose a considerable threat to FMG's future foot hold in the iron ore mining industry. In addition, the strong Chinese demand has started to encourage the development of new mines by smaller players. Mineral Resources Rent Tax (MRRT)

  2. The main purpose of this report is to develop an audit strategy for the ...

    3.0 Key business risks to CSIRO 3.1 Identify key business risks Generally speaking, business risk is mainly the potential possibility when firms cannot meet clients? key business objectives because of some future events or actions from both outside environment and inside company.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work